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Living Trust Basics

With a Living Trust, you can set up a flexible estate plan that fits your needs. Created during your lifetime, a Living Trust allows you to transfer your assets to a separate legal entity. One common benefit of a Living Trust is that it helps prevent your estate from going through the probate process, saving time for the family members you leave behind. Create a Living Trust to control your assets and property while providing for your family after your death.

Sample Living Trust

Other names for a Living Trust

Inter Vivos Trust, Revocable Living Trust.

How Living Trusts Work:

First, you’ll need to create a trust and transfer ownership of some of your property to the trust. When doing so, name yourself (and your spouse, if you so choose) as trustees. This means that you’ll retain control of the property. Then, in your Living Trust, name the beneficiaries you want to receive this property after your death. Appoint a competent and responsible “successor trustee” to handle the distribution of this property.

Living Trust v. Will:

One of the most common questions people have when they’re creating an estate plan is “what’s the difference between a Living Trust and a Will?” You should know that while laws do vary state to state, there are a few important differences to keep in mind:

Living Trusts help avoid probate: The probate process can be costly and can significantly cut into the property and assets you leave your heirs. While creating a Living Trust is a bit more difficult than making a Will, it doesallow your heirs to avoid probate, thereby keeping more of your assets and getting those assets much more quickly.

A Living Trust is private: Wills are, in the end, public documents. A Living Trust, on the other hand, is not. If you have certain assets you’d like to keep private or if the idea of your last wishes becoming public isn’t something you’re comfortable with, a Living Trust might be right for you.

Transfer of property: Both a Will and a Living Trust allow you to transfer property. In a Will, you simply name the property. In a Trust, however, you must make certain to transfer that property into the trust. You may still use the property in question while you’re alive, but you won’t technically be the owner, since you’ve placed it in a Trust.

Notary Public: In some states, you don’t need the presence of a notary public when signing and witnessing a Will. But for a Trust, you do. Make sure your Trust is legal by signing it with a certified notary.

Guardianship: You cannot name a guardian for your children in a Living Trust. To do so, you must use a Will. This is why parents of small children often create both documents with the help of a trained estate planning attorney.

Revocable vs. Irrevocable Trusts:

The most common types of Trusts are Revocable Living Trusts. This means, simply, that you have the right and the ability to nullify the Trust itself and either create a new one or use other estate planning documents to organize your affairs. An Irrevocable Trust, on the other hand, is a much more complicated document, generally created by those with a lot in the way of assets. Although it’s never a bad idea to have an estate planning attorney look over your Trust, it’s especially important if you’re going to make your Trust irrevocable.

Other estate planning documents:

A Living Trust is just part of a complete estate plan. Here are some other documents you should consider:

If you have any questions about what’s right for you and your estate plan, we can connect you with a lawyer for quick answers or a document review. If you'd like to read more about Living Trusts and other estate planning essentials, check out our Estate Planning Guide.

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